Replacing workers with robots doesn't always cause chaos. Towns with a 'medium' amount of automation are actually more stable than those with none at all.
March 27, 2026
Original Paper
Automation and Labor Market Volatility: Evidence of a Non-Monotonic Relationship
SSRN · 6208478
The Takeaway
Common wisdom suggests that more robots always equals more disruption for workers. However, this study reveals a U-shaped relationship where intermediate automation helps firms absorb productivity shocks more smoothly, making the local labor market less volatile than in regions that haven't automated at all.
From the abstract
This paper constructs a panel dataset of 722 U.S. commuting zones from 1990 to 2019 and documents a significant and robust U-shaped relationship between start-ofperiod automation exposure and subsequent unemployment volatility. Regions with intermediate automation exposure experience more stable labor market fluctuations, while regions with either low or high exposure exhibit greater volatility. To interpret this non-monotonic pattern, I develop a partial equilibrium framework with endogenous au